MarketWatch’s Hulbert: Stock Market’s Reaction Day After Election is Unknowable

While speculation is percolating through the stock market as to how investors will react the day after the election, MarketWatch columnist Mark Hulbert says the answer can’t be predicted, regardless of who wins.

He raised the question of whether stocks would rise after a victory by GOP presidential nominee Mitt Romney, but haven’t done so yet because the odds are still against a Romney win even though the odds have increased dramatically.

So Hulbert looked at elections with surprise results. On the day after Harry Truman upset Thomas Dewey, the Dow Jones Industrial Average dropped 3.9 percent, but it had already fallen 2.2 percent in the three months prior to the election.

In 1960, the Dow gained 0.8 percent the day after John Kennedy upset Richard Nixon. The Dow fell 2.7 percent in the three months before the election.

In 2000, when George W. Bush upset Al Gore, the Dow slipped 1.7 percent between Election Day and mid-December, when a Supreme Court ruling guaranteed Bush’s victory. In the three months prior to that election, the Dow rose 1.0 percent.

While speculation is percolating through the stock market as to how investors will react the day after the election, MarketWatch columnist Mark Hulbert says the answer can’t be predicted, regardless of who wins.